Yes, it’s hard to get a mortgage with a credit score of less than 700, but it’s not impossible. Your best bet is to pursue an FHA loan.

While the agency will insure a loan to a borrower with even a 500-credit score, that borrower won’t be offered the attractive 3.5 percent down payment option but will have to pay at least 10 percent down.

FHA background

The Federal Housing Administration is an office of the Department of Housing and Urban Development (HUD).

According to the former’s website, the program “costs taxpayers nothing. The proceeds from the mortgage insurance paid by the homeowners are captured in an account that is used to operate the program entirely.”

Which is not entirely true. After the last recession, FHA requested and got a taxpayer-funded bailout of about $1.7 billion.

FHA doesn’t grant loans, it ensures their repayment and, as mentioned earlier, it will do so even for borrowers with FICO scores as low as 500.

But your credit score isn’t the whole ball of wax

FHA’s requirements don’t always match lenders’ requirements.

So, although FHA says “Hey, we’ll insure a loan for this guy or gal with a 580-credit score,” the lender may say “Well, that’s just swell, but we don’t make loans to people with scores that low.”

While you can go online and try to find lenders’ minimum score requirements, why bother? Speak with a mortgage broker and let him or her do the heavy lifting for you.

Leave the “Lender Name” box blank but enter city, county, state and ZIP Code.

Under “Insurance Type,” tick only the box for “Title II Mortgage Programs.”

Tick only the box for “Single Family Originator Only” under the “Service-Originator Type” heading. Click on “Search.”

Contact the lender of your choice from the list provided.

Another option for borrowers with low credit scores

Bank of America and Neighborhood Assistance Corporation of America offer mortgages to certain low- and medium-income borrowers with poor credit. Some borrowers even qualify for zero down-payment loans.

Known as “character-based” lending, the program takes a wholistic view of the borrower’s finances, making allowances for credit dings for things such as late-paid medical bills.

It’s not an easy process, but well worth it if you’ve been turned down elsewhere. Find out more about the program online at Naca.com.

As soon as you get that loan pre-approval letter, call us. We love house hunting!